Adjustments To Income

[Lazy Dog Tax Service]

In proseries, how do you make an adjustment to income without using the override?  With the override, you cant efile

[TaxGuyBill]

What is the adjustment for, and which line is it supposed to be on?

[Lazy Dog Tax Service]

I need to use the 24Z to write the description ... OTR that is not reimbursed fully for per diem

[TaxGuyBill]

Let's take a step back.  Why would that be an adjustment to income?

By OTR, so you mean an Over The Road truck driver?  Is that person an employee (with a W-2)?  If so, there is no additional deduction anywhere on the Federal tax return.

[Lazy Dog Tax Service]

Yes, an over-the-road (OTR) truck driver who receives a W-2 can claim a per diem deduction for meals and incidental expenses (M&IE) while away from home on business. However, the Tax Cuts and Jobs Act (TCJA) of 2017 eliminated the miscellaneous itemized deduction for unreimbursed employee business expenses for tax years 2018 through 2025 for most employees. This means that most W-2 employees cannot deduct these expenses on their federal income tax returns during this period. However, there is an exception for certain categories of employees, including OTR truck drivers who are subject to the Department of Transportation's (DOT) hours of service limits. These individuals can still deduct the per diem for M&IE as an adjustment to income rather than as an itemized deduction. This means they can deduct these expenses even if they do not itemize deductions on their tax return. The per diem rates are set by the General Services Administration (GSA) and can vary depending on the time of year and the location where the driver is spending the night. The IRS also allows a special standard meal allowance for transportation workers, which simplifies the deduction process. To claim the per diem deduction, the truck driver must keep records of the days they are away from their tax home and must not have been reimbursed for these expenses by their employer.

[TaxGuyBill]

Forgive me if I am missing something, but WHERE are you seeing such a rule?  I have never heard of such a rule.

[Just-Lisa-Now-]

Probably another AI answer based on outdated or incorrect information.

[Lazy Dog Tax Service]

I hadn't either but a client that is new to me this year sends me this and his old tax preparer has been doing it for him. He won't listen to NO... I'll have to see if I can find anything in an IRS pub about it

[abctax55]

My new best friend TaxBert says this:

Per diem payments reported in box 12 of Form W-2 with code L are considered part of a nonaccountable plan and must be included in wages in box 1. These amounts are subject to income tax withholding, Social Security, and Medicare taxes.

If the per diem payments exceed federal per diem rates, the excess amount must be included in box 1 as wages. The portion equal to or less than federal per diem rates can be excluded from box 1 if proper substantiation requirements are met under an accountable plan.

DOES your client, or his/her W-2 fit into any of the above?  

And it sounds as if the adjustment for 'less than per diem' would already be done on the W-2 by the employer.  Perhaps a paystub, or a call to the employer, would shed some light on it.

But I see nothing that says 'adjust out' on the 1040.

[TaxGuyBill]

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@Lazy Dog Tax Service wrote:

I hadn't either but a client that is new to me this year sends me this and his old tax preparer has been doing it for him. He won't listen to NO... I'll have to see if I can find anything in an IRS pub about it

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Please don't take a random deduction without verifying it.  🙂

If he insists on it, have him cite a credible source and then look up that credible source.  If there is no real evidence of such a deduction, you can't enter the deduction on the tax return.  If the taxpayer is upset about it, he won't be your client.

[BobKamman]

You may have found the reason that the old preparer is no longer doing returns. 

I found this from what looks like a reputable source:

As a result of the Tax Cuts and Jobs Act, W-2 employees, sometimes referred to as company drivers, are no longer eligible to claim the Per Diem deduction.

https://www.atbs.com/post/seizing-the-per-diem-tax-break